How to Start a CBD Business Online (with Launch Guide)

By now, you’ve probably come across an everyday product that contains hemp. The once relatively unheard-of substance has seized the mainstream by storm, showing up just about everywhere, from highway billboards to the shelves of high-end beauty shops. In the U.S., sales for cannabinol (commonly known as CBD oil, a derivative of the cannabis plant) are expected to reach a staggering $20 billion by 2024—the majority of which will come from retail stores.
Despite the growth and opportunities available, selling CBD can be complicated. You’ll need to navigate different obstacles and there is a particular blueprint you have to adopt for success. In this article, we’ll discuss both how to sell CBD online and how to profit from it. At the end, you’ll find a downloadable guide to help you launch your business.

Know the Legalities and Policies (It’s Complicated)

In a nutshell, CBD products are legal to sell…but there’s a catch. Any CBD product available for purchase online must be made from industrial hemp or contain a THC concentration of less than 0.3%. Any product derived from a form of CBD is subject to FDA regulation. The legality also varies from state to state, so you’ll have to comply with local laws. 

In addition, policies around CBD in ecommerce and paid advertising may change at any time. As a seller, you’ll want to monitor these movements closely and be prepared for changes in order to stay afloat in the industry.

Pick the Right Payment Technology

CBD sellers are considered “high-risk businesses”, meaning that many payment processors have calculated a high chargeback risk for their industry. As a result, many ecommerce and payment technology providers may opt out of supporting CBD sales. To find the right payment technology for your business’ needs, look for a provider that both supports CBD transactions and has experience working with other CBD merchants.

Choose a Reputable CBD Supplier

Whether you’re reselling or creating your own CBD products, finding a reputable supplier is important. When evaluating a provider, you’ll need to understand some key details of their manufacturing process, including where they source their CBD and what concentration of THC their products have (usually detailed in the “Certificate of Analysis”). This ensures that your business has high-quality, legal products to sell to your customers.

Pick the Right Products, Target the Right People

Popular CBD products have taken the form of creams, sprays, beers, gummies, pet treats, beverages, and supplements. These products are often used to treat ailments like anxiety, depression, and muscle pain, making them popular in the beauty, wellness, and lifestyle industries.
Studies show that millennials, baby boomers, and women are the biggest consumers of CBD today, with 54% of customers being new to using hemp-based products. Because CBD has not reached a wider audience yet, there is great potential for bringing new customers to your brand. The consumable nature of CBD is also more likely to create repeat shoppers who purchase multiple times a year.

Find Your Competitive Edge

As CBD products saturate the market, your business’ unique branding can be your secret sauce, helping you stand out from the competition. Focus on your differentiators—what customers can get from you that they can’t find anywhere else. What sets your product apart? Why should customers purchase from you? Determine the need for your product and appeal to that need with brand benefits such as expertise, product quality, convenience, and curation.

Think Outside the Box Whitepaper

CBD sellers face a lot of questions. What is the difference between hemp oil and CBD? What is CBD good for? Craft content such as “how-to” guides, email newsletters, and studies to inform your customers and maintain transparency with them.

Despite CBD’s popularity, most uses of it aren’t approved or validated by the FDA. This means you have to be careful about making claims about your products. The bottom line? Avoid promising benefits in your marketing and focus instead on your unique brand and product differentiators.

Channel Word-of-Mouth Marketing

The bad news: CBD advertising is not allowed on many popular online ad platforms. The good news: word-of-mouth marketing will be your best friend. Many brands look to social media influencers, experiential marketing, and audio advertising to generate attention for their brand and to disperse product testimonials. For those who have a smaller marketing budget, Facebook groups and subreddits are outlets that can get the word out for your products.

Forge New CBD Business Opportunities

Position your brand as a leader by attending trade shows such as the NoCo Hemp Expo and CannaGrow Expo. You’ll get the chance to survey the competition, expand your reach, and build important contacts that can lead to profitable business opportunities down the line.

The customer demand for CBD is expected to continue to increase. Despite the risks, entrepreneurs are selling CBD to capitalize on growing customer interest. If government regulations lighten, the industry could reach a new high in profitability. While time will tell whether they have staying power, CBD products currently provide a promising market for forward-thinking retailers.

Ready to launch your CBD brand? Get started with this downloadable checklist:

Download Guide

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